CB Richard Ellis Group, Inc. Announces Earnings Per Share up 60% for Third Quarter of 2006.LOS ANGELES Los Angeles (lôs ăn`jələs, lŏs, ăn`jəlēz'), city (1990 pop. 3,485,398), seat of Los Angeles co., S Calif.; inc. 1850. -- CB Richard Ellis CB Richard Ellis Group, Inc. NYSE: CBG is a multinational real estate corporation currently based in Los Angeles, California, U.S.A.. On December 20, 2006, the corporation, also known as CBRE, completed acquisition of Trammell Crow Co. in a transaction valued at $2. Group, Inc. (NYSE NYSE See: New York Stock Exchange :CBG CBG corticosteroid-binding globulin. ) today reported revenue for the third quarter ended September 30, 2006 of $903.9 million, up 21.5% over the third quarter of 2005, and diluted earnings per share diluted earnings per share An earnings measure calculated by dividing net income less preferred stock dividends for a period by the average number of shares of common stock that would be outstanding if all convertible securities were converted into shares of of $0.39 for the third quarter ended September 30, 2006, compared with $0.25 for the same quarter last year. Excluding one-time charges1, third quarter 2006 diluted earnings per share was $0.40, an increase of 60.0% from the $0.25 earned in the third quarter of 2005. Third Quarter Highlights For the third quarter of 2006, the Company generated revenue of $903.9 million, up 21.5% over the $744.2 million posted in the third quarter of 2005. The Company reported net income of $92.3 million, or $0.39 per diluted share, in the third quarter of 2006 compared with net income of $56.9 million, or $0.25 per diluted share, in the third quarter of 2005. Excluding one-time items, the Company would have earned net income2 of $94.5 million, or $0.40 per diluted share, in the third quarter of 2006, an increase of 64.4% and 60.0%, respectively, compared with net income of $57.5 million, or $0.25 per diluted share, in the third quarter of 2005. Earnings Before Interest, Taxes, Depreciation, and Amortization Earnings before interest, taxes, depreciation, and amortization (EBITDA) A financial measure defined as revenues less cost of goods sold and selling, general, and administrative expenses. (EBITDA (Earnings Before Interest, Taxes, Depreciation and Amortization) A metric used to show a company's profitability, but not its cash flow. EBITDA became popular in the 1980s to show the potential profitability of leveraged buyouts, but has become )3 totaled $163.5 million for the third quarter of 2006, an increase of $52.3 million, or 47.0%, from the same quarter last year. The Company's third quarter results continue to reflect strong performance across virtually all business lines and geographies, as well as contributions from acquisitions. Of the 21.5% revenue growth, approximately two-thirds was due to organic growth and one-third was attributable to acquisitions completed in 2005 and 2006. The double-digit organic growth was fueled by notably improved leasing activity in most major markets as well as increased revenue in the appraisal/valuation, mortgage brokerage, property and facilities management The management of a user's computer installation by an outside organization. All operations including systems, programming and the datacenter can be performed by the facilities management organization on the user's premises. and investment management operations. This marks the 16th straight quarter of double-digit year-over-year organic revenue growth. Nine-Month Results Revenue was $2.4 billion for the nine months ended September 30, 2006, up $465.6 million, or 23.8%, compared to the same period last year. Approximately two-thirds of the improvement was due to organic growth, while acquisitions completed in 2005 and 2006 drove the remainder of the revenue increase. The Company reported net income of $193.5 million, or $0.83 per diluted share, for the nine months ended September 30, 2006 compared to net income of $121.9 million, or $0.53 per diluted share, in the same period last year. Excluding one-time items, the Company would have earned net income of $213.8 million, or $0.91 per diluted share, for the nine months ended September 30, 2006, up 64.4% and 59.6%, respectively, over net income of $130.0 million, or $0.57 per diluted share, for the nine months ended September 30, 2005. EBITDA was $393.1 million for the nine months ended September 30, 2006, up $125.2 million or 46.7% compared to the same period last year. Management's Commentary "Our business continues to perform very well in all our major geographies around the world," said Brett White Brett White (born April 8 1982 in Cooma, New South Wales) is an Australian professional rugby league footballer. He plays for the Melbourne Storm in the National Rugby League. , CB Richard Ellis' president and chief executive officer. "Our premier brand, global platform and client-service focus have enhanced our capture of market share and have positioned us to benefit significantly from the generally strong commercial real estate markets around the world. We are assisting many companies in the expansion of their operations due to continuing economic growth, and rental rates are rising as vacancy rates decline. As discussed previously, the buoyancy buoyancy (boi`ənsē, b  `yən–), upward force exerted by a fluid on any body immersed in it. Buoyant force can be explained in terms of Archimedes' principle. of the leasing market more than offset the expected pullback in
investment sales activity. Overall, our business remains very strong as
we approach year-end, traditionally our busiest time of the year."
Third-Quarter Segment Highlights Americas Region Third quarter revenue for the Americas region, including the U.S., Canada, Mexico and Latin America Latin America, the Spanish-speaking, Portuguese-speaking, and French-speaking countries (except Canada) of North America, South America, Central America, and the West Indies. , increased 13.2% to $584.7 million, compared with $516.7 million for the third quarter of 2005. This largely organic revenue increase was mainly attributable to a continued improving leasing trend as well as higher mortgage brokerage, appraisal/valuation and property and facilities management fees. Operating income Operating Income The profit realized from a business' own operations. Notes: This would not include income from things such as investments in other firms. Also referred to as operating profit or recurring profit. for the Americas region totaled $87.9 million for the third quarter of 2006, compared with $64.5 million for the third quarter of 2005. Excluding the impact of one-time items, operating income for the Americas region would have been $90.6 million for the third quarter of 2006, an increase of $24.9 million, or 37.9%, as compared to $65.7 million for the third quarter of last year. The Americas region's EBITDA totaled $101.3 million for the third quarter of 2006, an increase of $26.2 million, or 34.9%, from last year's third quarter. EMEA (Europe, Middle East, Africa) Refers to that region of the world. For example, one might see products packaged differently for the UK, EMEA and Asia Pacific markets. Region Revenue for the EMEA region, mainly consisting of operations in Europe, increased 29.3% to $193.3 million for the third quarter of 2006, compared with $149.6 million for the third quarter of 2005. Organic revenue growth accounted for nearly half of this increase, with the remainder coming from acquisitions completed in 2005 and 2006. Operating income for the EMEA segment totaled $35.1 million for the third quarter of 2006, compared with $26.7 million for the same period last year. Excluding the impact of one-time items, operating income for the EMEA region would have been $35.5 million for the third quarter of 2006, an increase of $8.7 million, or 32.2%, from the third quarter of last year. EBITDA for the EMEA region totaled $38.7 million for the third quarter of 2006, an increase of $9.8 million, or 34.0%, from last year's third quarter. These improvements were primarily driven by significantly higher sales and leasing activities as well as higher appraisal/valuation revenues. Asia Pacific Region In the Asia Pacific region, which includes operations in Asia, Australia and New Zealand New Zealand (zē`lənd), island country (2005 est. pop. 4,035,000), 104,454 sq mi (270,534 sq km), in the S Pacific Ocean, over 1,000 mi (1,600 km) SE of Australia. The capital is Wellington; the largest city and leading port is Auckland. , revenue totaled $84.5 million for the third quarter of 2006, a 91.6% increase from $44.1 million for the third quarter of 2005. The Company's acquisition of a majority stake in its Japanese affiliate IKOMA CB Richard Ellis KK in January 2006 accounted for just over half of the revenue increase, with the remainder primarily coming from organic growth throughout the region. Operating income for the Asia Pacific segment totaled $5.0 million for the third quarter of 2006, compared with $5.9 million for the same period last year. EBITDA for the Asia Pacific segment totaled $8.3 million for the third quarter of 2006, an increase of $1.9 million, or 30.0%, from last year's third quarter. Integration activities related to IKOMA and investment in growth in China have impacted margins in the Asia Pacific segment; however the Company expects that operating income and EBITDA will rise upon full integration of IKOMA and as the benefits from investment spending in China are realized. Global Investment Management Business In the Global Investment Management segment, which consists of investment management operations in the U.S., Europe and Asia, revenue totaled $41.4 million for the third quarter of 2006, a 22.1% increase from the $33.9 million recorded in the third quarter of 2005. This increase was mainly due to carried interest revenue earned in the U.S. as a result of the liquidation The collection of assets belonging to a debtor to be applied to the discharge of his or her outstanding debts. A type of proceeding pursuant to federal Bankruptcy of a fund. Assets under management Assets Under Management (AUM) is a term used by financial services companies in the mutual fund and money management or investment management business to gauge how much money they are managing. grew to $25.0 billion as of the end of the third quarter, up $7.7 billion, or 44.5%, from year-end 2005. This segment reported operating income of $10.9 million for the third quarter of 2006, compared with an operating loss operating loss The excess of operating expenses over revenue. As with operating income, operating losses exclude revenues and expenses from operations that are not considered a regular part of the business. Also called deficit. Compare operating income. of $1.2 million for the same period last year. EBITDA for this segment totaled $15.2 million for the third quarter of 2006, an increase of $14.3 million from last year's third quarter. The improved performance was mainly attributable to $13.5 million of revenue from a fund liquidating (carried interest revenue) in the third quarter as well as $3.8 million of lower incentive compensation expense recognized for dedicated executives and team leaders associated with this segment's carried interest programs. For the nine months ended September 30, 2006, the Company recorded a total of $22.8 million of incentive compensation expense related to carried interest revenue, only $2.0 million of which pertained to revenue recognized during the nine months ended September 30, 2006 with the remainder relating to relating to relate prep → concernant relating to relate prep → bezüglich +gen, mit Bezug auf +acc future periods' revenue. Revenues associated with these expenses cannot be recognized until certain financial hurdles are met. The Company expects that it will recognize income from funds liquidating in future quarters that will more than offset accrued incentive compensation expense recognized. The Global Investment Management segment did not incur any one-time costs in the current or prior year quarter. Other Business Highlights The Company's mortgage brokerage business continues to post steady gains in loan origination The examples and perspective in this article or section may not represent a worldwide view of the subject. Please [ improve this article] or discuss the issue on the talk page. volume. For the first nine months of 2006, total volume increased 14.6% to $14.2 billion. The Company is benefiting from a continued strong appetite for debt financing Debt Financing When a firm raises money for working capital or capital expenditures by selling bonds, bills, or notes to individual and/or institutional investors. In return for lending the money, the individuals or institutions become creditors and receive a promise to repay as well as increased referrals from other CB Richard Ellis business lines. The Company continued to post significant growth in its outsourcing services directed to institutional and corporate customers. Net growth in the U.S. Asset Services portfolio improved by 200% with a net gain of 43 million square feet in the first nine months of 2006, compared with a 14 million square foot increase for the same period in 2005. The Company also was awarded significant new outsourcing assignments from corporate clients, including Wachovia, WPP Group WPP Group plc (LSE: WPP) (NASDAQ: WPPGY), based in London, United Kingdom, is one of the world's largest communications services groups (and one of the big six advertising holding companies, the others being Omnicom, Interpublic, Publicis, Dentsu and Havas) employing , Cintas, The Hartford, TIAA-CREF TIAA-CREF Teachers Insurance and Annuity Association - College Retirement Equities Fund and RBC RBC red blood cell. RBC or rbc abbr. red blood cell RBC, n See red blood cell count. RBC red blood cells; red blood (cell) count (see blood count). Dain Rauscher, totaling in the aggregate approximately 39 million square feet globally. Guidance The Company is increasing its full year guidance for 2006. CB Richard Ellis expects to generate full year diluted earnings per share growth of approximately 45%, excluding one-time charges, as compared to 2005 performance. The Company's third-quarter earnings conference call will be held on Thursday, October 26, 2006 at 10:30 a.m. EDT EDT abbr. Eastern Daylight Time EDT Eastern Daylight Time EDT n abbr (US) (= Eastern Daylight Time) → hora de verano de Nueva York EDT . A live webcast will be accessible through the Investor Relations Investor relations The process by which the corporation communicates with its investors. section of the Company's Web site at www.cbre.com. The direct dial-in number for the conference call is 800-230-1096 (in the U.S.) and 612-234-9959 (for international callers). A replay of the call will be available beginning at 2:00 p.m. EDT through midnight November 10, 2006. The dial-in number for the replay is 800-475-6701 (in the U.S.) and 320-365-3844 (for international callers). The access code for the replay is 845537. A transcript of the call will be available on the Company's Investor Relations Web site. About CB Richard Ellis CB Richard Ellis Group, Inc. (NYSE:CBG), a FORTUNE 1000 company headquartered in Los Angeles, is the world's largest commercial real estate services firm (in terms of 2005 revenue). With approximately 14,500 employees, the Company serves real estate owners, investors and occupiers through more than 200 offices worldwide (excluding affiliate and partner offices). CB Richard Ellis offers strategic advice and execution for property sales and leasing; corporate services Activities that combine or consolidate certain enterprise-wide needed support services, provided based on specialized knowledge, best practices, and technology to serve internal (and sometimes external) customers and business partners. ; property, facilities and project management; mortgage banking; investment management; appraisal and valuation; and research and consulting. Founded in 1906, CB Richard Ellis marks a century of excellence in real estate services this year. Please visit our Web site at www.cbre.com. Note: This release contains forward-looking statements within the meaning of the "safe harbor Safe Harbor 1. A legal provision to reduce or eliminate liability as long as good faith is demonstrated. 2. A form of shark repellent implemented by a target company acquiring a business that is so poorly regulated that the target itself is less attractive. " provisions of the Private Securities Litigation Reform Act The Private Securities Litigation Reform Act of 1995 (PSLRA) implemented several significant substantive changes affecting certain cases brought under the federal securities laws, including changes related to pleading, discovery, liability, class representation and awards fees and of 1995, including statements regarding our growth momentum in 2006, future operations and future financial performance. These forward-looking statements involve known and unknown risks, uncertainties and other factors that may cause the Company's actual results and performance in future periods to be materially different from any future results or performance suggested in forward-looking statements in this release. Any forward-looking statements speak only as of the date of this release and, except to the extent required by applicable securities laws, the Company expressly disclaims any obligation to update or revise any of them to reflect actual results, any changes in expectations or any change in events. If the Company does update one or more forward-looking statements, no inference should be drawn that it will make additional updates with respect to those or other forward-looking statements. Factors that could cause results to differ materially include, but are not limited to: commercial real estate vacancy levels; employment conditions and their effect on vacancy rates; property values; rental rates; interest rates; realization of values in investment funds Noun 1. investment funds - money that is invested with an expectation of profit investment assets - anything of material value or usefulness that is owned by a person or company to offset related incentive compensation expense; any general economic recession domestically or internationally; general conditions of financial liquidity for real estate transactions; our ability to leverage our platform to sustain revenue growth; our ability to retain and incentivize in·cen·tiv·ize tr.v. in·cen·tiv·ized, in·cen·tiv·iz·ing, in·cen·tiv·iz·es To offer incentives or an incentive to; motivate: producers; our levels of borrowing; and the integration of our acquisitions. Additional information concerning factors that may influence CB Richard Ellis Group, Inc.'s financial information is discussed under "Risk Factors", "Management's Discussion and Analysis Management's discussion and analysis (MD&A) A report from management to shareholders that accompanies the firm's financial statements in the annual report. It explains the period's financial results and enables management to discuss topics that may not be apparent in the financial of Financial Condition and Results of Operations", "Quantitative and Qualitative Disclosures About Market Risk" and "Forward-Looking Statements" in our Annual Report on Form 10-K Form 10-K A report required by the SEC from exchange-listed companies that provides for annual disclosure of certain financial information. Form 10-K See 10-K. for the year ended December 31, 2005, and under "Management's Discussion and Analysis of Financial Condition and Results of Operations", "Quantitative and Qualitative Disclosures About Market Risk" and "Forward-Looking Statements" in our Quarterly Report on Form 10-Q Form 10-Q See 10-Q. for the quarter ended June 30, 2006, as well as in the Company's press releases and other periodic filings with the Securities and Exchange Commission. Such filings are available publicly and may be obtained off the Company's Web site at www.cbre.com or upon request from the CB Richard Ellis Investor Relations Department at investorrelations@cbre.com. 1 One-time charges include amortization expense related to net revenue backlog acquired in acquisitions, integration costs related to acquisitions and loss on extinguishment The destruction or cancellation of a right, a power, a contract, or an estate. Extinguishment is sometimes confused with merger, though there is a clear distinction between them. of debt. 2 A reconciliation of net income to net income, as adjusted for one-time items, is provided in the exhibits to this release. 3 The Company's management believes that EBITDA is useful in evaluating its performance compared to that of other companies in its industry because the calculation of EBITDA generally eliminates the effects of financing and income taxes and the accounting effects of capital spending capital spending Spending for long-term assets such as factories, equipment, machinery, and buildings that permits the production of more goods and services in future years. and acquisitions, which items may vary for different companies for reasons unrelated to overall operating performance. As a result, the Company's management uses EBITDA as a measure to evaluate the performance of various business lines and for other discretionary purposes, including as a significant component when measuring its performance under its employee incentive programs. However, EBITDA is not a recognized measurement under U.S. generally accepted accounting principles The standard accounting rules, regulations, and procedures used by companies in maintaining their financial records. Generally accepted accounting principles (GAAP) provide companies and accountants with a consistent set of guidelines that cover both broad accounting (GAAP GAAP See: Generally Accepted Accounting Principles GAAP See generally accepted accounting principles (GAAP). ), and when analyzing the Company's operating performance, readers should use EBITDA in addition to, and not as an alternative for, net income determined in accordance with GAAP. Because not all companies use identical calculations, the Company's presentation of EBITDA may not be comparable to similarly titled measures of other companies. Furthermore, EBITDA is not intended to be a measure of free cash flow for management's discretionary use, as it does not consider certain cash requirements such as tax and debt service payments. The amounts shown for EBITDA also differ from the amounts calculated under similarly titled definitions in the Company's debt instruments, which are further adjusted to reflect certain other cash and non-cash charges and are used to determine compliance with financial covenants and the Company's ability to engage in certain activities, such as incurring additional debt and making certain restricted payments. For a reconciliation of EBITDA with the most comparable financial measures calculated and presented in accordance with GAAP, see the section of this press release titled "Non-GAAP Financial Measures." 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